On Tuesday, the California State Assembly approved Governor Gavin Newsom’s new refinery supply mandate, which now heads to the state Senate. The proposed legislation will require oil refiners to keep a minimum gas reserve on hand, and gives the California Energy Commission the power to require oil refiners to provide resupply plans to address losses in production caused by refinery maintenance.
If signed into law, these measures will likely hike gas prices in California and in neighboring states like Arizona and Nevada.
Central Valley Republicans Oppose Proposal, Select Democrats Abstain
The proposal passed through the State Assembly with wide Democratic support on a vote of 44-17, but also had bipartisan opposition. Several Democrats abstained from voting and all Republicans voted against the mandate.
Following the vote, Assembly Republican Leader James Gallagher (Yuba City), expressed his ever growing frustration with Newsom continually driving up gas prices:
“Newsom’s scheme won’t do a damn thing to lower gas prices, and he knows it. As long as Democrat politicians refuse to stand up to the governor, costs at the pump are only going to increase.”
Assembly Democrats Esmeralda Soria and Jasmeet Bains both voted against the proposal. While Bains declined to comment, Soria voiced concerns that Newsom’s proposal was risky and unproven. Another Democrat who does not support the proposal, Assembly Member Blanca Rubio, who abstained, said she could not support the measure because of “concerns regarding worker safety, practicality and the actual impact this measure would have on prices at the pump and on working class families.”
Energy Producers Warn Supply Mandates Will Mean Higher Prices at The Pump
Gallagher’s concern over the proposal raising gas prices, rather than reducing them, is echoed by warnings from the state’s oil industry. The industry has said the analysis by the Division of Petroleum Market Oversight at the CEC, which led to Newsom’s proposal, does not capture the realities of the operations of oil refineries.
“Without a deep understanding of the complexities of refinery operations, policymakers are gambling with consumers’ wallets,” CEO of the Western States Petroleum Association Catherine Reheis-Boyd said in a press release.
California’s own regulations have resulted in complex bottlenecks in their energy supply chain, which contribute to the state’s high gas prices. Establishing a minimum fuel storage requirement will do nothing to address the current issues, and will only increase gas prices more, which now average $4.67 per gallon – $1.48 more than the national average of $3.19.
Union Workers and Raise the Alarm Over Worker Safety
Higher gas prices aren’t the only issue on the horizon if the bill is to pass – by giving the state more control and oversight of refineries’ planned maintenance schedules, the proposal could also compromise the safety and autonomy of the state’s refinery workers.
Politico reported in its California newsletter that the State Building and Construction Trades Council, a powerful union whose workers help maintain and construct refinery components, strongly opposes the proposal. Last week, union members who work at the state’s refineries packed into an Assembly meeting room to testify on the bill, with some workers suggesting that Newsom’s proposal prioritizes short-term economic or political gain over worker safety.
Chris Hannan, president of the state Building Trades Council, spoke to CalMatters after the assembly advanced the bill in committee last week:
“Hopefully they don’t move forward with something with this much uncertainty that could jeopardize worker safety and jobs in our state.”
The sponsor of the bill, Assembly member Gregg Hart, told the Assembly he is continuing to consider the safety concerns raised by the State Building and Construction Trades Councils of California.
Still, Politico reports that the assembly did not make any amendments to the bill to consider the Building Trades’ position.
Impact Beyond California: Arizona and Nevada Brace for Price Hikes
Other critics of the proposal include Arizona Governor Katie Hobbs and Nevada Governor Joe Lombardo. In September, the two sent a bipartisan letter to Gov. Newsom urging him to reevaluate his oil refinery proposal. Both governors expressed concerns that Newsom’s proposed requirements threaten to slash oil supplies and send gas prices higher in both of their states.
Newsom’s legislation comes at a politically crucial moment in Arizona and Nevada, with both states expected to be tightly contested in next month’s presidential election. The decision by Newsom to call a special session and press the issue now is raising eyebrows among many political experts, especially given recent reported friction between the Harris campaign and Newsom.
Harris trails in NV. She might have questions about Newsom’s timing. -> “Newsom’s bad neighbor energy plan”https://t.co/ixLWHLqjeP
— Rob Stutzman
(@RobStutzman) October 1, 2024
Despite warnings from peer governors of both parties and organized labor, Gov. Newsom appears intent on jamming the bill through the legislature. Senate President Pro Tempore Mike McGuire has already informed his members that they will reconvene to consider the bill on October 7th, and made it clear his chamber has the votes to pass the proposal.
BOTTOM LINE: Newsom’s plan is the last thing his political allies need in neighboring states like Arizona and Nevada. If ABX 2-1 passes, which is likely to happen in the State Senate, it will be the latest blow against working families in California, Arizona and Nevada, who can expect to see their already high gas prices only increase further.
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